Wages in the period were 2.1% up on a year earlier, little changed from the previous months’ growth rates.

With inflation hitting 2.9% in August, wages are failing to keep up.

In real terms, wages dropped by 0.4% in the three months to July.

Matt Hughes, a senior ONS statistician, said: “Another record high employment rate and a record low inactivity rate suggest the labour market continues to be strong.

“In particular, the number of people aged 16 to 64 not in the labour force because they are looking after family or home is the lowest since records began, at less than 2.1 million.

“Despite earnings rising by 2.1% in cash terms over the last year, the real value of people’s earnings is down 0.4%.”

Inflation has picked up sharply since the pound fell after the Brexit vote last year.

Sterling, which had been rising against the dollar in morning trading, fell after the ONS data were released. Wage growth figures were weaker than expected.

The pound fell from $1.3299 before the data to $1.3266 afterwards, down 0.13% on the day.

Employment minister Damian Hinds said: “The strength of the economy is helping people of all ages find work, from someone starting their first job after leaving education, to those who might be starting a new career later in life.

“But there is more to do, and we will continue to build on our achievements through our employment programmes and the work of Jobcentre Plus.”

Interest rates

Economists have been pondering what the latest data means for the course of interest rates.

The panel that sets interest rates at the Bank of England will makes its announcement on Thursday.

Last month two committee members backed a rate rise, and there has been speculation that the Bank’s chief economist Andy Haldane could join them this week.

That would still leave the committee split 6-3 against raising rates from the record low 0.25%.

Some economists think that the latest data will favour the so-called doves, who argue in favour of keeping rates on hold.

“While the continued strength of employment will be welcomed by the MPC, the continued absence of a pick-up in wage growth is likely to keep the doves in the majority,” said Andrew Wishart, UK economist for Capital Economics.